Federal deficit plunges as Congress tightens budget belt

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The federal budget is looking much better in fiscal 2014, according to new estimates the Congressional Budget Office released Wednesday that show the government ran a $44 billion surplus in December and is well ahead of last year’s pace.

For the first quarter of fiscal year 2014, which ran from October through December, spending was down dramatically — some $62 billion — while taxes were up $48 billion, suggesting that last year’s tax-increase deal and several years of spending cuts were beginning to chip away at record deficits.

Military spending fell $11 billion, and Fannie Mae and Freddie Mac returned money to the government, rather than taking taxpayers’ money as the two government-sponsored enterprises had done during much of the economic slowdown.

Meanwhile, tax revenue has soared after Congress let payroll tax rates rise at the beginning of 2013, and let income tax rates for the wealthiest go up as well.

All told, the government spent $846 billion from October through December, down from $909 billion during the same period the previous year. Taxes, meanwhile, rose from $616 billion the previous year to $664 billion the first three months of this fiscal year.

Still to be seen is the effect of last month’s budget deal, which increased spending this year and next, and will likely put somewhat of a break on the progress.

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